News that inflation has dropped to 2.8% this month will be welcomed by mortgage borrowers.
This week the government announced that despite the global uncertainty and the impact of the Iran war on oil supplies, inflation in the UK dropped to 2.8% this month.
While this is still above the Bank of England’s 2% inflation target, it is below the 3.3% figure that was given for the 12 months to March 2026, so good news for the Government and consumers in the UK.
The easing of inflation could result in reduced mortgage rates, which would help buyer confidence and affordability, however in an uncertain global climate it’s important to plan your financial situation carefully.
The conflict in the Middle East is continuing, impacting energy prices and the daily cost of living.
Since the start of the Iran war fixed rate mortgages have risen, however the initial spike that occurred at the start of the war has eased and lenders have made some cuts over the last few weeks, returning some confidence to the market.
The positivity is supported by the International Monetary Fund (IMF) saying that the Bank of England won’t need to increase interest rates in 2026 to combat inflation.
More optimistic than other analysts, it believes that while inflation may rise to just under 4% by December, the Bank of England could get it down to its 2% target by the end of 2027 without increasing interest rates – if all other factors remain equal.
However, it does warn that the Middle East conflict and domestic political uncertainty may result in interest rate rises needed to control inflation.
So, while the news about the UK economy has been positive over the last couple of weeks, caution is still in the air thanks to the unpredictable global situation. If you’re thinking of buying and want mortgage advice then we recommend speaking to Kirsty Williams Mortgage Solutions, who will give you accurate, honest advice to help you.